The HR manager of a German software company faces issues determining the compensation for a potential new hire from the US. The candidate is asking for a higher salary and stock options that exceed what the company typically offers and what her potential reporting manager earns. The HR manager must determine a compensation package that both retains the highly qualified candidate while addressing concerns over internal equity and a lack of strategy around compensating foreign employees. The response recommends a compensation model that includes a base salary, incentive pay tied to performance targets, equity compensation, cost of living adjustments, and other benefits to make the package competitive while still aligned with the company's German pay scales. It also suggests communicating these plans and developing policies for employees moving between countries.

1. INTERNATIONAL INSTITUTE OF PLANNING AND MANAGEMENT
AHMEDABAD
Assignment on
Typware
INTERNATIONAL HRM
Submitted To
Prof- Robin Thomas Sir
By:
Pratik K S Negi
SS/09-11/ISBE/HR
About the case
Characters involved in the case
A> Renate Schmidt – HR manager ( Typware ltd German software giant’s)
B> Anne Prevost – ( the head hunt for the job position)
C> Jürgen Mehr – ( European head of Marketing)
D> Thomas – CEO of the firm
E> Rainer Barth – contact at the consulting firm
Q1- what are the issues that the HR manager is facing in determining the compensation?
Ans- Typware AG- the company, the issues in the case revolve around the HR manager Renate Schmidt,
who has an issue hanging in front of her regarding the compensation plan fixation.
- Renate Schmidt faces with foreign assignees are symptomatic of Typware lack of strategy.
- The demand what Anne is asking for jumping the ship was way above the rate what company
has given to other nationals
- Offer from Seistrand Systems ready to offer her the same package with stock options.

2. - The offer the candidate is asking is equal to the reporting officer and thus the dissatisfaction has
cropped in from the reporting head itself.
- Dilemma of grating or approving such a high package.
- Candidate has categorically checked the figure in differences in tax rates, inflation, benefits,
floating currencies, and other options.
- Renate Schmidt – was in some pressure to work out the incentives and compensation and
recommendation to be drafted for the recruit.
- Pay was not rationalized at all, and Renate had noticed increasingly troublesome salary and
benefit disparities among the managerial ranks.
- female and minority employees made less than their white male counterparts
- Implementation of a person specific pay system was not relevant as because in such monolithic
pay scale environment.
German Pay scales were set as an bench mark in the international expansion
+
enrollment in local health care programs, as well as contributions to
their German social security and retirement plans
This policy worked because German standard & PPP (higher compared to other countries)
- She holds a weak hand in her negotiations with manpower present round the globe with their
demands which were region and person specific and management decision to cater them to
retain the best work force.
- She holds a weak link to the personal and social obligations and other remunerations plus
incentives that she is getting in US and other differential that she has to make a demarcation for
anchoring in the candidate.
- No history to guide her in the case of hiring a foreign national working at the head quarter.
-
-
-
Q2- How will you decide the compensation of the candidate?
Ans- Would like to suggest a model for the remuneration that the company should allocate to her to
make sure that she becomes an integral part of the strategy team.
Reasons to anchor her as a prospect
1. The candidate is herself interested
But now the question is that a person from other company is being offered a
place in the system in Germany for which no clear demarcations are possible

3. 2. Anne understands and flexible enough to understand the problem the company is facing.
Model what I will propose
Base Pay (fixed as in for the last employee at the same position) [40 %]
+
Incentive system (as per the business development that she will develop)
[20 % on German scaling]
10 % if targets meet on average
It will make sure that the
15 % if targets meet at par
Inclusion of Anne is justified
20 % if above par
+
(Equity compensation can be included) if company agrees to it
+
{Rest 40 % will be a package pay for international work force}
HRA (on German scales)
+
Education incentive and other incentives
+
Standard of living incentive (if a mismatch with base country PPP)
+
Additional cash bonus (for SME positions)
+
(Tax exception bonus for US properties and other assets if there)
+
Special allowances for direct dependents in the domicile country
+
Additional (incentives for cost of living and package balance)
+
Medical insurance from the company + gratuity and other pension plans to be reimbursed if the US
[SSN] doesn’t work out.
+
Children educational loans and other fringe benefits can be included
 Plus we have to make sure that these changes have to be communicated to all the employees
that they are specific plans for the people coming from other countries to Germany.
 Plus we have to choke out plans for Germans who will be venturing out to other countries
where the operations of Typware are established.
 Plus a referral plan can be included for the employees of the company so that they can
incentives as per the people joining the organization.